Thursday, August 21, 2008

Hampsons, the FAA, the press and now this....

UPDATED FRIDAY 22nd August 17.49 GMT

****PRESS RELEASE****

Eclipse Aviation Targets Financial Stability as CEO Roel Pieper
Implements Operational Excellence Program

Company reduces workforce by 38 percent

ALBUQUERQUE, NM - August 22, 2008 - Today Eclipse Aviation(r),
manufacturer of the world's first very light jet (VLJ), announced a
reduction in workforce as a result of its operational excellence
strategy introduced by CEO Roel Pieper at AirVenture in Oshkosh, Wis.,
July 28, 2008. Eclipse is reducing its workforce by approximately 38
percent which includes temporary workers and people employed less than
six months. The reduction is an effort to achieve financial stability
as soon as possible. Eclipse is laying off approximately 650 employees
affecting all departments and facilities including Albuquerque, N.M.;
Gainesville, Fla.; and Albany, N.Y. Eclipse's total employment remains
at about 1,100. The impact of this action will be a slowdown in the
production of Eclipse 500s through 2008. In 2009, Eclipse intends to
increase production back to previous levels and higher.

"In my effort to take Eclipse Aviation to the next level of growth and
sustainability, I am 100 percent focused on operational excellence and a
plan to achieve it," said Pieper. "Financial stability is critical for
this company and unfortunately, a reduction in workforce was necessary
to achieve it. I am confident this action will set the company on the
path to profitability so that we can continue to lead the very light jet
category."

Eclipse will not be releasing any further information or conducting
interviews surrounding this press release at this time.

That's the official press release. However, I've have contradictory information. I believe EAC are trying to bend figures and 'make like' they're are going to continue with viable production capacity. This is difficult to square with what we know from Albany, IS&S and Hampsons. When you've been reading EAC press releases for as long as I have, you learn to 'parse' the words, then the phrases, then the sentences and finally the message as a whole. Note the careful use of words like 'about', 'approximately' and 'effort'. He's the CEO, and he is not able to tell the press how many people are going and how many are staying. And another thing. I thought all the 'temporary' workers were let go two weeks ago. While I know people have been hired (but not trained very well) in the recent past, I'm interested in how many that would actually add up to.  Finally, for this update, I understand that several contradictory stories are flying around ABQ. A 'standard' version has the total number of layoffs (total) at just under '800' today, and another '400' on Monday.

Original post below

I pretty proud of you lot. It's only two days since the last 'headline' and I can justify a new one.

First, a post from 'Forward Observer' which is a perfect example of what the blog is about. He manages to intertwine personal relationships and political attachments with a true focus on safety. For these reasons alone, it would deserve promotion to 'headline' status. However it's also a good story in it's own right.

Second, I bring you disturbing news from Grand Prairie, Texas. It seems that Hampson Aerospace, whom we last heard of settling their dispute with Vern, have decided to take their chips off the table and leave the game. This is very serious should EAC be able to resume volume production. It must also send a clear signal to other suppliers, as it will be a tad difficult to fly an aircraft without a tail.

Finally, there is an imbalance in our 'coverage' of the traditional media. Not all have followed the EAC line over the past decade. Several are notable by their balanced coverage, including AINonline and AVweb. Some comments I made yesterday would tend to paint all journalists in an unflattering light. This was plainly unfair. So, credit where it's due, and inform your future reading habits by how your favorite source behaved in it's coverage of EAC.

So to begin, the post by Forward Observer. A few of the links didn't work (for me) so I cut them and I've done a little tidy up on the spacing, but it's otherwise as it first appeared yesterday:-

Forward-Observer said

Well, the FAA’s press release, at

http://www.faa.gov/news/press_releases/news_story.cfm?newsId=10273

trumpets that the FAA is getting right on that pesky Eclipse 500 plane - you know the very first “Special Certification Review” team to prepare a report prior to the September Congressional hearing.

All should be well, everything is fine- “Move along, Move along, these are not the droids you are looking for” could be the intended message. The FAA leadership in Washington is hot the trail, and will make sure everything is just fine. The press release even says “Jerry Mack, a former Boeing safety executive, is leading an oversight team of seven FAA experts.” Is on the job.

Wooaa fellah. Who?

Jerry Mack?

Who is Jerry Mack??

Well, for starters, he’s not even an FAA employee.

And to be represented as a “Senior Safety Executive” might be a bit of a stretch.

You see, Jerry Mack, appears to be an amazing person to appoint to lead a “Special Certification Review” on behalf of the FAA. He’s not working elsewhere right now, and he’s a personal hand-pick of the Senior leadership of the FAA’s Aircraft Certification Service to go look into this. Perhaps it was Mr. John Hickey, the Director of the Aircraft Certification Service, who may have chosen Mr. Mack for the job. After all, both previously worked for the Boeing Company.

I can see why Mr. Mack would be the person selected to take a look and see if the FAA was being fair in applying the rules to little ‘ol ECLISPE Aviation. What, pray tell, qualifies Mr. Mack to determine if the FAA applied the regulations properly, when it award a Type Certificate to the Eclispe 500? Well, let’s start with his recent employment. You see Mr. Mack wasn’t working for the FAA. His name does not appear in the employee web directory.

No, he’s an outside contractor that has been brought in to make things appear that All is Well. Mr. Mack previously worked for the Boeing Company. alright. But his most recent job title was not as an engineering safety evaluator. No, it was as the Vice President of Government Technical Affairs for several years.

In that job, his job was to make sure that the Government left the Boeing Company alone. He was paid some pretty big bucks to make sure that nobody from the Government could get too close to the Boeing Company’s secrets. Jerry Mack- Boeing vice president of Government / Industry Technical Liaison for Boeing Commercial Airplanes

Of course, Mr. Mack has had some other employment recently. It turns out Mr. Mack spent a good deal of time at the Aerospace Industries Association. Mack was elected as Aerospace Industries Association AIA’s Civil Aviation Council, and remained there for a period of time. His contacts among the head honchos at the FAA proved very valuable. It appears he is well know and well connected. He’s an ideal man for the job.

http://aia-aerospace.org/aianews/press/2003/rel_01_29_03.cfm

In fact, here’s a photo of Mr. Mack hard at work in his job with the AIA. He’s shown here at the Paris Airshow with his arms around a couple of beauties:

http://www.aia-aerospace.org/images/paris05/paris05_0615_princi.jpg

(AIA Membership Manager Trish Ward, left, Jerry Mack in the middle, and Membership Assistant Vice President Michelle Princi on the right, at the Paris Airshow in 2005)

Now, you might remember some of the interesting things that happened in the time frame following Mr. Mack’s election to the AIA council. You see, it was in that time, Mr Mack, the vice president of Government/Industry Technical Liaison for Boeing Commercial Airplanes, found a few friends in Washington. It was shortly thereafter than another fine executive, namely one Ms. Marion Blakey, found a wonderful new job offer waiting for her over at AIA.

Remember that one? When the FAA Administrator jumped ship to go to the AIA and pick up a six-figure salary? Of course, some might say that’s politics getting into the mix. You might be right. After all, Mr. Mack has paid his dues. In fact, he donated handsomely to George W. Bush’s re-election campaign in 2004, and to John McCain’s run in 2008. Apparently $250 bucks to McCain 2008 is all that’s needed to cement your appointment to a contractor position, to investigate if management of the FAA was ok in it’s issuance of a type certificate. 

Fair and balanced safety review?

Or political hack, former Boeing government liaison executive, hired by another former Boeing employee (Hickey), with bone fide political donations and connections, and now paid to say that everything is fine?

Maybe. Maybe not.

We report.

You decide.

Whew. There is a man with an opinion and the ability to express it.

Next Hampson Aerospace. They are located in Grand Prairie Texas, where they have been making the FPJs' vertical stabilizer, horizontal stabilizer, rudder and elevator. On Wednesday they 'closed their doors' and told the staff to contact HR at a nearby sister company for further information. After Albany, then IS&S and now Hampsons, who will be keen to continue working with EAC, even if they manage to get that critical funding? I'm told they are looking for something in the region of $200 million dollars. Pretty steep ask in the current climate, don't you think?

I'll finish with a reminder not to treat all journalists, or the media outlets that employ them, the same. There are a number who have called this company to account from day one.

Things are moving quickly. I'll try to stay in the loop as much as I can but remember you can always get me by email at

eclipsecriticng@gmail.com

Shane

421 comments:

«Oldest   ‹Older   401 – 421 of 421
gadfly said...

A few thoughts from the gadfly:

Wise investors find someone who is truly a “practical genius” in a certain field, hire him, and give him direction. Notice I said “practical genius” . . . there are many wild eyed inventors who have no concept of how to build their inventions, nor the practical considerations involved in taking their ideas to the final market place.

So, to begin, to take someone who may have great ideas about a “flying machine” may be a wrong choice from the start. That flying machine needs to be built . . . fly in a most safe and stable manner . . . be manufactured by people of average abilities . . . be able to “grow” in size, efficiency, speed . . . and all at low cost.

It is a rare “genius” who can meet those requirements, and it is rare to have an investor that recognizes those requirements . . . but history records such men, and investors.

Think of Edison . . . a genius who early recognized not only the need for “invention”, but that there must be support and room for growth. Think of the men who invested in Edison, allowed him to pursue his inventions, with co-workers of his own choosing . . . and think, “General Electric”.

This is not a promotion of “GE”, for of late they have somewhat lost their way. But others in the time of Edison failed to recognize the requirements of coupling “invention” with “practical application” and pro-active support to the customer . . . with a clear vision of the future.

Did Edison have it all together? . . . No! But he did get much of it right. ‘Just this morning, I turned on the lights in the bathroom . . . a loud “pop” indicated a burned out halogen flood lamp . . . and examined the genius of the “Mazda” screw-in base . . . over a hundred years old, anticipating the needs of a maximum contact area of the threads, and the soft-to-hard contact point at the end of the bulb.

One of his ex-employees is still remembered, also . . . “Tesla” . . . and that’s fine. But it was Edison that made it work . . . and some investors that understood how to go about building a company.

Unfortunately, Eclipse has violated virtually every rule that could be applied to building a good company. And at the moment seems to be intent on committing suicide by mistreatment of employees . . . ex-employees . . . ‘just the most recent in a long list of violations of ethical behavior.

gadfly

(Now don’t get your liver in a quiver . . . any fool can find fault with my “logic” . . . these just happen to be my observations . . . and notice I make no pretense at being anything other than the “gadfly”.)

Ceri said...

Flightcenter:

"
Ceri,

So if I understand your recent posts correctly, your position is that it is possible that:

1) Eclipse can be restructured as a profitable company,
2) A new Eclipse Aviation company will emerge after completing a series of design changes and that new company will deliver E500 aircraft that will meet all of the original specifications,
3) 30 days is enough time for the FAA to conduct an SCR, and
4) DayJet might in fact, a year from now or so, become a profitable company. "

Umm...

1. I don't know that it's not possible. I believe it to be pretty unlikely.
2. I don't know that it's not possible. I believe it to be pretty likely that the basic airframe will end up being sold with decent avionics and other upgrades.
3. I don't know that it's not possible. None of us (the blog), as far as I can tell, knows enough about the terms of reference to be able to answer this except by bootstrapping their existing prejudices.
4. I firmly believe Dayjet will never, ever be profitable and never, ever had any chance of being profitable. I don't believe I've written anything that contradicts that belief.

My position on 1,2,3 is that we (the blog) lack the knowledge to make definitive statements about them. The tendency for most people who post is to make assumptions about each of these, which I don't necessarily agree with.

At the risk of being revealed as an outright pedant, I'm trying to use the terms 'knowledge' and 'belief' appropriately, here. When someone says they 'knew' Dayjet would fail, that implies perfect knowledge of the future, and it's evidently a fallacious statement. What they mean is they had a very strong belief - backed by good instincts and market knowledge, perhaps - that Dayjet would fail. That is not the same as actually knowing Dayjet would fail.

Several posters also seem to have a serious confusion between equity and debt and how the two would influence the future of Eclipse.

I don't have a horse in this race - never had any involvement with Eclipse, or Vern, or Ed. I'm just a more-or-less disinterested observer.

Dave said...

So Dave I., what investment over what time period will be required of new investors to get to the point of realizing a return comensurate with the risk they will be taking?

I know the question wasn't directed at me, but I believe we wont know the answer to that until after the FAA, Oberstar and others get done with Eclipse and the aircraft has more testing. Earlier it was posted on here (but not corroborated) that the airframe is only good for 3500 hrs due to poor construction rather than 10,000 hrs as it is rated. If the FPJ isn't fit for commercial service, DayJet would have to dump the fleet and go with props and/or other jets. I believe there is a niche business in [per seat] charter, but it might not be with the FPJ...depending on how the charter business is persued would determine what level of risk there is. Someone could have a pretty low risk mom-and-pop shop as an owner/operator or someone could try and have service nationwide which would be high risk...both could be sufficiently profitable for the level of risk involved as there isn't just one answer. BTW, I'm interested in venture capital and I think it would be a field to get into it or participate in.

TBMs_R_Us said...

Gadfly,

Funny post! Of course, I hope you remember that it was Tesla who was the real genius. Edison tried DC power distribution, which failed miserably, while Tesla invented AC distribution and had to fight with Edison about it. Edison tried to trash Tesla along the way. Edison invented the tungsten filament light bulb, now in disfavor for its inefficiency, while Tesla invented the fluorescent bulb, now the 'green' alternative.

Totally off topic, sorry for that.

Dave said...

Think of Edison . . . a genius who early recognized not only the need for “invention”, but that there must be support and room for growth. Think of the men who invested in Edison, allowed him to pursue his inventions, with co-workers of his own choosing . . . and think, “General Electric”.

Edison was as much a hard-nosed businessperson as a inventor - if not moreso. Edison did sometimes have a tin ear (literally) and held back his innovations, but overall he knew how to run a business.

airtaximan said...

funny thing is, we need to gove EAC credit for some things...

Anyone who spends 12 years and $2.X Billions (I think all in, its more than $2B, and I'm sticking to it!!!) must have done sme things RIGHT..so here goes.

1- they redesigned and redesigned the plane, and I think its the best possible plane that it really could be, right now. I think if they could possibly finish it - it should remain as is. A wholesale change on one part will result in a wild spin, and not much more utility can be derived from this plane, if it is finished.

2-they spend so much time and money on sales and marketing, that I think they sold almost every one they could ever realistically hope to sell... plus a bunch of made up orders. So, I'd say, at most, ever, there are 2600 (they seem to love and need this number of orders, so why not?) is the total market for the E500... 10/month for 12 years...sounds like a winner to me.

3- the E400 looks like a winner to me. At around the same price as the CirrusJet... it should sell a lot. They should promote it, and finish it, and bring it to market in mor e than 5 or 6 years. Until then make and sell 10 E500s per month.

That's about it - I think everything else is scrap. Actually, the e500 is scrap, too, but its the best it can be - just the wrong plane for a large market - that simple. DOA.

PS. of course, the ability to raise money was "the best it could be".... AND if they get more, they deserve another trophy!

Dave said...

3- the E400 looks like a winner to me. At around the same price as the CirrusJet... it should sell a lot. They should promote it, and finish it, and bring it to market in mor e than 5 or 6 years. Until then make and sell 10 E500s per month.

My feelings are the exact opposite - unless you take the Frankenjet to be a prototype and the ECJ to be a prototype of a prototype. I think whatever safety problems there are in the FPJ are magnified in the Frankenjet. Look no further than the hacking of Avio to think the PW615 is a PW610. If any Eclipse model was to survive as is, it would be the FPJ rather than the Frankenjet.

Ceri said...

Whytech:"So Dave I., what investment over what time period will be required of new investors to get to the point of realizing a return comensurate with the risk they will be taking?"

Dave gave an answer to this one, now I'll have a go.

My supposition is that it won't be based solely on ROI, rather that the investor(s) want to be in the airplane business. After all, that seems to be at least part of the motivation for a lot of Vern's backers (sorry, no specific source for this ... just seems to be a lot of rich guys he knew who thought it was a neat thing to be involved in).

The alternative answer is to look at the captive upgrade market and the development costs for fixing the a/c. I've already speculated waaaay too much about this already (sorry!) - but it seems to me that we can't rule out this approach being profitable, for the right owner.

WhyTech said...

Dave said:
BTW, I'm interested in venture capital and I think it would be a field to get into it or participate in."

Smart man! Years ago I got some advice "Get into venture capital any way you can." Turned out to be the best advice I have ever received.

gadfly said...

TRU

Yes, we all know about Tesla . . . a genius to be sure . . . but Tesla's contributions are of a short list, while much of modern life is, today, a result of Edison's genius.

gadfly

(And it is little understood, but with solid state electronics and electrical switching systems, the best transfer of high energy electricity is "DC", and not "AC". The problem up until recently has been how to "break" a circuit . . . and AC seemed to be the only answer, as it goes to "zero" 120 times per second in the US. DC has that nasty characteristic of continuing the arc, when the circuit is broken. But now we can "break the arc" using certain "Plasma" priority systems, already proven in the lab, (right here in ABQ, by the way) without creating a "Jacob's Ladder" effect . . . and soon may enjoy an overall efficiency increase of about 30% . . . "sine wave" RMS average compared to continuous DC . . . with the added benefit of less "AC" interference in radio signals. 'Maybe Edison was "thinking ahead" after all.)

WhyTech said...

"My supposition is that it won't be based solely on ROI, rather that the investor(s) want to be in the airplane business."

This can work, and is a more likely way to raise the capital than via professional financial inverstors, who are usually investing other peoples money and are obligated to attempt to produce "suitable" returns. Sometimes known as "lifestyle" investing, where a larger proportion of the rewards are psychic rather than financial.

I have often been approached over the years by companies proposing to develop new aircraft who were seeking capital (including Cirrus). I have suggested this approach to all as the financial rewards from investing in new aircraft companies have been elusive to say the least.

WhyTech said...

"3- the E400 looks like a winner to me. At around the same price as the CirrusJet... it should sell a lot. They should promote it, and finish it, and bring it to market in mor e than 5 or 6 years"

IMO, in 6 years, it will be too little, too late unless the others on this path falter.

gadfly said...

WhyTech

Be very careful about the design that you find exciting. To others who may have some “feel” for aerodynamics, stability, and manufacturing, that “cute little bird” may be a nightmare in reality.

gadfly

(More later . . . if this bird factory survives more than a few weeks!)

Shane Price said...

New post up.

Thanks to all who contributed to this thread.

Shane

WhyTech said...

"Be very careful about the design that you find exciting."

Gad,

Not sure why you think I find the EA400 exciting. I dont. It looks odd to me, and the flying qualities are said by the test pilot to be far from benign, likely requiring un-natual acts to make it suitable for the average pilot. My point was just that if it takes 6 years to bring it to market, it seems likely that the world will have passed it by.

PawnShop said...

So Dave I., what investment over what time period will be required of new investors to get to the point of realizing a return comensurate with the risk they will be taking?

Hey, no fair! I thought I threw enough qualifiers in there that I'd never have to answer that question.
:-)

[ Since I'm talking about "qualifiers" here, I should probably mention "disqualifiers" too - I have NO experience in aircraft production, NO experience in financing a business with outside investment, and NO particular insight into the personal jet market ( being a candidate-in-waiting for an SR20 ). I'm just another idiot who reads the blog because the subject matter interests me. ]

That's a very good question. My WAG would be $150 to $250 million of "fortitude", with the expectation of not seeing any return above "debt service" for four years or so. I actually have a basis ( of sorts ) for those numbers and a sequence of events in mind, but would rather you consider me just another bloviating fool, than open my mouth and incontrovertibly prove it to you ( well, that, and I seem to be unable to describe my "plan" in under 5000 words ).

Would you like fries with that?
DI

PawnShop said...

Sometimes known as "lifestyle" investing, where a larger proportion of the rewards are psychic rather than financial.

I have often been approached over the years by companies proposing to develop new aircraft who were seeking capital (including Cirrus). I have suggested this approach to all as the financial rewards from investing in new aircraft companies have been elusive to say the least.


"Aviation - Making small fortunes out of large ones, for 105 years ( and counting )"

Would you like the combo?
DI

No Mas said...

Extending the premise that Vern-ier dispensed Kool-Aid to a willing throng of quasi-competent yuppies (yup Vern, yup, yup) … and since folks are in a speculative mood, what is the prevailing wind on the following big paychecks at SunPort:

Peg Bilson – Can't Operate Officer and all around Yes Girl, Never met a schedule she didn’t like … or was that Never met a schedule, period?
No Mas says “retained for now, replaced by the new investors, or asked to tidy up the place after the repo man comes.”

Jack Harrington – Business Affairs – No one ever saw him around SP except on pay day, no one will miss him when gone.
No Mas says “Since the business is in the dumper, so is he”

Patrick Duffy – Product Development – Came in late, run away while you can.
No Mas says “He stays on, lives on his USAF retirement pay, flys the only airplane not AOG ... no real responsibility for the debacle. Previous Cheef Injuneer, now COO at Diamond, Ken Harness gets his well deserved smack down by the FAA, Congress, or the creditors.”

Don Burtis – Senior Veep and Senior Good Fella – Father of the Avio concept, responsible for brokering bad deals with Avidyne, IS&S, and Chelton.
No Mas says “Hate to see bad things happen to a nice guy, but how many bad deals can one guy make. Gone”

Oliver Masefield – also a Senior VP and Good Fella – Poor execution kills a great concept every time. The devil is in the details … unless he is in the CEO’s suite.
No Mas says “The only real asset Roel has. Asked to stay, but will likely walk away.”

Mike McConnell – VP Propaganda – Cant stand on convictions you don’t have. Did Vern’s bidding too often.
No Mas says “Stays a short while. Decides to leave 30 days after his telephone and email are cut-off. Still hangs around parking lot until new tenants call the police”

Rest of the crew … who cares?

What say the blog?

Formerly known as "Just zis guy, you know?" said...

FYI, someone else copied my screen name. This comment and those that follow did not come from me. Talk about gems:


20yrmechanic,

Whoever hires you is going to get a real gem. You've admitted that you don't care about your non-disclosure agreement, a legal contract that you willingly signed in exchange for employment. While in the employ of EAC, you cashed your paychecks while bad-mouthing them on this blog.

You claim to be concerned about the safety of those flying in the E500, yet you continued to participate in building what you considered an unsafe product.

You might want to research the meaning of the word "integrity", since it's apparently not in your vocabulary.

God help whoever hires you.

Jim Howard said...
This comment has been removed by the author.
mbeat said...

In regards to the Hampson Aerospace layoff in Grand Prairie.. Employees were told to all meet for a Group Meeting that would be held on the shop floor. Employees were informed at that point that today would be there last day about 30 mintures prior to shift ending. It took managers about 20 minutes to inform 100 + employees that they would be with out a job as of this day. Hampson provided no notice and or onsite outreach assitance for the employees of over 100. It was a sad sight to see.

«Oldest ‹Older   401 – 421 of 421   Newer› Newest»